Opec warns of oil price war with Russia

Financial Times ^ | July 19 2002 20:23 | By Matthew Jones in London and Robert Cottrell in Moscow

[Ben Ficklin]

No one can produce crude as cheaply as the Saudis and no one has the capacity that the Saudis have.

The loss of revenues that the Saudis would encounter by lowering prices would be partially offset by increased volume.

The first to be hurt by falling prices are US producers. At $19/barrel, drilling in the US stops. At $14/barrel, the valves on existing units are closed. Cheap oil increases our reliance on imported oil. Not to mention what is does to production of natural gas. The US is already in a drilling slump. There are about 725 active rigs in the US. Last year at this time there were 1250.

When prices fall, govt increases the excise tax. Remember '98?

For stability and benefit of all producers, the price of crude needs to be $25 +/- $2/barrel.

[Stavka2]

My personal dream would be the Isrealies putting a nuke into those misbegotten oil fields and watching the desert rats return to the ways of their great grand fathers.

[Sacajaweau]

Russia has learned that using their assets (oil) means jobs, growth, economic benefits and trade.

Now, if only we would consider the oil assets of "Seward's Folly" which we refuse to tap "for our benefit".

Not utilizing this asset, establishes Alaska as "The 2002 Folly".

Sac

[LibKill]

My personal dream would be the Isrealies putting a nuke into those misbegotten oil fields and watching the desert rats return to the ways of their great grand fathers.

Spectacular, but unnecessary. Once the Arab states implode, they will go to pieces like a cheap hand grenade.

[Stavka2]

The Saudies might have the resource stability but they don't have the political stability to get away with it for long. Besides, the Europeans get oil by pipe line which offsets a lot of the cost...transportation...and the US market for Russia is still tiny.

[rface]

for the time being, I would rather spend $1.50/gal for Russian gasoline than $1.00/gal for Arabian gasoline

Ashland, Missouri (where the cheapest unleaded goes $1.39/gal)

[rface]

I think it was three summers ago, maybe four, that unleaded hit $0.75/gal here.

Ashland, Missouri

[Double Tap]

No you wouldn't. First off, if it hits 50 cents a gallon, that would mean that the government would have quit taking the 35 to 40 cent a gallon tax, which will never happen. That would be a good thing, but will never happen.

Second, gas prices that low would devastate the American Oil industry. If you ruin that, then you will be left at the mercy of the countries we import from next time the price starts to go up. Anyone want $4.00 a gallon gas??? Talk about shut the economy down.

[contessa machiaveli]

i'm willing to pay more per gallon for russian oil. prez bush was very clever to solidify relations with mr. putin.

[flamefront]

Looks like the scenario in The Summit Oil Deal - Setting the Stage for even Bigger Oil Bargains is taking shape.

[reg45]

If SA runs a deficit, that means the Saudi family itself is way in debt.

The Good Side
• Less money for Wahabbists.
• Less money for Madrasas.
• Less money for Palestinians.
• Less money for Al-Qaida.
• Less money for the Bin Laden family.

I don't really see a bad side.

[DB]

:-)

Now for some long-term contracts with the Russians so they don't have to worry about short term price fluctuation (Arab threats) and can safely continue to increase production.

[Eala]

And I also believe that the federal and state gov't will fill any vacuum from retail price decline with increased excise and sales taxes

Here in the People's Soviet of Washington (on the Left Coast), that's not an issue of belief -- it's guaranteed!

[SauronOfMordor]

The loss of revenues that the Saudis would encounter by lowering prices would be partially offset by increased volume.

The ideal scenario would be to drop prices to the point where the Saudis have just enough revenue to support their internal welfare state, but not enough to finance exporting radical Islam to the world

And the more the Saudis produce, the sooner they come to the point where they've exhausted their oil, and go back to being camel jockies

[SauronOfMordor]

The first to be hurt by falling prices are US producers. At $19/barrel, drilling in the US stops. At $14/barrel, the valves on existing units are closed. Cheap oil increases our reliance on imported oil.

OK, so put a $5/barrel tariff on imported oil to replace the gasoline tax. OPEC oil would then have to sell for $15 in order to be competitive with domestic $20 oil.

Better would be a strong program to increase nuke plant contruction, with a goal to have 60% of US power production be nuke by 2020, accompanied by raising the tariff on imported oil to $15/barrel

[COBOL2Java]

Hey OPEC! (Organization of Petroleum Exploiting Countries)
Payback's a b.... well, you know what I mean.

[Great Dane]

Since Russia is not a member in OPEC, they have no business trying to control Russia's prices....... it's called competition.

[razorback-bert]

Latest estimates of Saudi production is they maybe could increase production 5-10%, Saudis today have more effect shutting down rather than increasing production. This is why, they are losing market share.

[research99]

RE: "Now for some long-term contracts with the Russians so they don't have to worry about short term price fluctuation (Arab threats) and can safely continue to increase production."

Let's look at oil production and geo-politics. We know that the Saudis have covertly financed this 'Islamic' militarism, precisely where it hurts competitive oil producers the most: In lands they need to build and operate (vulnerable) pipelines to the West: Chechnaya, Afghanistan, Armenia. So it's not just a matter of safety, it's again a case of a 'war' being fought for trade.

And before we kid ourselves, remember that we now E-X-P-O-R-T Alaskan crude to Asian markets! So why would we 'need' to drill for more, as opposed to simply refining what we already produce?

[SevenDaysInMay]

Recently reported, Saudis have esablished 7,000 "schools" across the world. IMO, these mosques and schools are a long-term investment is the next Sword of Islam offensive. If Arab OPEC countries face an economic meltdown in part due to their own severe corruption, the well schooled devout sleepers can wreck havoc on western economies. Default on loans by the "royal family" is also a tool or weapon.

Last night I heard that a Saudi royal was caught somewhere in Europe with 2 tons of coke in his "diplomatic pouch". Asymetric warfare is their battle plan.

This world war started 9/11/2001. Non-Islamists should recognize this reality. The American economic miracle challenges the failed theo-fascist societies of Islam. By proxy, Arab states will continue to attack our nation destroying lives to weaken our economy. Ther "Royal Family" foolishly believes that they will survive this war.